Last updated on Mar 19, 2024
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Assess your cash flow
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Cut unnecessary costs
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Boost your sales
4
Manage your debts
5
Seek external funding
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Monitor and review
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7
Here’s what else to consider
Cash flow and financial management are crucial for any retail business, especially in times of uncertainty and competition. If your retail business is struggling with these aspects, you might feel overwhelmed and stressed. But don't panic, there are some steps you can take to improve your situation and regain control of your finances. Here are some tips to help you out.
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- Akeem Adetula Head of Retail Expansion and Special Projects mPharma Nigeria
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1 Assess your cash flow
The first thing you need to do is to understand your current cash flow situation. Cash flow is the difference between the money coming in and the money going out of your business. It shows how much cash you have available to cover your expenses, invest in your growth, and pay yourself. To assess your cash flow, you need to track your income and expenses, create a cash flow statement, and forecast your future cash flow based on your sales projections and payment terms. You can use accounting software, spreadsheets, or templates to help you with this process.
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- Vijaydeep Pawar
If my retail business is struggling with cash flow and financial management, I'd first analyze expenses and revenue streams to identify areas of improvement. Then, I'd create a budget, prioritize expenditures, and negotiate better terms with suppliers. Implementing strategies like inventory optimization, offering promotions, or diversifying product offerings can boost cash flow. Seeking guidance from financial advisors or accessing small business loans may also provide short-term relief while working on long-term sustainability plans.
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2 Cut unnecessary costs
Once you have a clear picture of your cash flow, you can identify where you can save money and reduce your expenses. Look for areas where you can eliminate or minimize costs that are not essential for your business operations or customer satisfaction. For example, you can negotiate better deals with your suppliers, vendors, and landlords, switch to more energy-efficient equipment and lighting, reduce inventory levels and waste, outsource some tasks or functions, or automate some processes. You can also review your pricing strategy and see if you can increase your margins without losing customers.
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- Akeem Adetula Head of Retail Expansion and Special Projects mPharma Nigeria
In the community pharmacy space , for example, a lot of retail business spend too much on :1. excessive staff2. Slow moving items3. Aesthetics4. Miscellaneous etc
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3 Boost your sales
Another way to improve your cash flow and financial management is to increase your sales and revenue. There are many strategies you can use to attract more customers, retain existing ones, and encourage repeat purchases. For example, you can improve your marketing and promotion efforts, offer discounts, incentives, or loyalty programs, upsell or cross-sell complementary products or services, create bundles or packages, expand your product range or target market, or sell online or through other channels. You can also improve your customer service and feedback systems to enhance your reputation and referrals.
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- Akeem Adetula Head of Retail Expansion and Special Projects mPharma Nigeria
This is easier said than done.However, it pays to focus on strategies that suit your immediate community/market.For example , low income community/market , loyalty programs , discounts , value added services might be beneficial as compared a high income community where improved or premium product rages might boost sales
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4 Manage your debts
If your retail business has debts, such as loans, credit cards, or bills, you need to manage them effectively and avoid defaulting or accumulating interest and fees. You can do this by prioritizing your debts according to their urgency and cost, negotiating better payment terms or lower interest rates with your creditors, consolidating your debts into one loan or account, or refinancing your debts with a lower-cost option. You can also seek professional advice or assistance from debt counselors, financial planners, or accountants if you need help with your debt management.
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- Akeem Adetula Head of Retail Expansion and Special Projects mPharma Nigeria
Well I have seen many retail businesses close down due to poorly managed debt e.g poor servicing of loans , abuse of credit from suppliers .
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5 Seek external funding
Sometimes, your retail business might need some extra cash to cover a temporary cash flow gap, a seasonal fluctuation, or an unexpected expense. In these cases, you can seek external funding from various sources, such as banks, investors, government agencies, or crowdfunding platforms. However, before you apply for any funding, you need to make sure you have a solid business plan, a realistic budget, a good credit score, and a clear purpose and repayment plan for the funds. You also need to compare the different funding options and their costs, benefits, and risks.
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6 Monitor and review
Finally, you need to monitor and review your cash flow and financial management regularly and adjust your strategies accordingly. You can use tools such as cash flow reports, financial statements, budgets, and ratios to measure your performance and identify any issues or opportunities. You can also set goals and benchmarks for your cash flow and financial management and track your progress and achievements. You can also seek feedback and advice from your customers, employees, partners, mentors, or peers to improve your practices and learn from others.
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7 Here’s what else to consider
This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?
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- Dimitri Van Wichelen Chief Executive Officer - IGSI Europe Ltd.
1. Trim Expenses: Identify and reduce unnecessary expenses without compromising quality or customer experience. 2. Optimize Inventory: Efficient inventory management practices such as just-in-time ordering and clearance sales can free up cash and minimize storage costs.3. Negotiate Payment Terms: Collaborate with suppliers and creditors to negotiate favorable payment terms, easing cash flow constraints.4. Boost Sales and Marketing: Explore targeted marketing strategies, promotions, and customer retention tactics to increase revenue and improve cash flow. And get a external audit if needed.Navigating financial challenges is part of the retail journey, and adopting proactive measures can pave the way for long-term success.! 💪
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